Showdown over drilling vessel off Cyprus could spur more talks
Turkish warships have blocked a gas exploration ship in the Mediterranean; standoff has spurred talk that regional powers need to resolve the divided nation's status, and properly define adjacent seabed areas, so energy projects can proceed
For two weeks this month, the oil and gas exploration ship Saipem 12000 lay rolling at anchor, some 80 kilometers off the southeast coast of Cyprus.
The 60,000-tonne vessel, charted by Italian energy giant ENI, had not fallen victim to engine failure, fire or accident. Rather, with circling Turkish warships blocking its path, the Saipem had become the latest victim in a long and potentially lethal international confrontation.
And this dispute, which involves Cyprus, Turkey, Italy, the European Union and the intractability of the decades-old Cyprus problem, may be about to escalate.
“There’s a considerably increased possibility,” says Ian Lesser, the US German Marshal Fund’s Vice President for Foreign Policy, “of all this soon going somewhere much, much darker.”
When Turkish warships blocked its passage, the ENI-chartered drilling ship had been heading to Block 3 of Cyprus’ offshore Exclusive Economic Zone (EEZ).
Since the discovery of large gas reserves in nearby Israeli and Egyptian waters, the Eastern Mediterranean island’s offshore blocks have been of increasing interest to international oil and gas companies.
In 2011, this interest led Nobel Energy to discover the Aphrodite gas field, adjacent to Israel’s large Leviathan field. And earlier this year, a partnership between French major Total and ENI announced a further promising find close to the giant Egyptian Zohr gas field.
While these announcements have been welcomed by the Cypriot government, they also highlight a series of interlocking disputes in the Eastern Mediterranean over territorial waters and rights to the hydrocarbon spoils.
Central to all these is the island of Cyprus and its unresolved division.
Back in 1974, Turkey invaded Cyprus after a Greek-backed coup sought to join this independent nation to Greece. Subsequently, the northern third, which had been occupied by Turkish troops, broke away to form the Turkish Cypriot-dominated “Turkish Republic of Northern Cyprus”, recognized only by Turkey. The southern, largely Greek Cypriot two-thirds remained as the internationally-recognized Republic of Cyprus (ROC). This joined the European Union in 2004, although the state remains unrecognized by Turkey and divided from the north by a UN-patrolled buffer zone.
For many years now, the UN has also been facilitating negotiations between Turkish and Greek Cypriot leaders aimed at reunifying the island. However, the latest round of these talks broke down last summer and they have yet to restart.
Throughout all this, the ROC has claimed that Cyprus has a single EEZ, for which it alone is responsible, stretching all around the island. Yet Turkey claims that its maritime boundaries and continental shelf give it a right to much of the same area.
The Turkish Cypriot breakaway state also claims that it has rights in the matter.
“The Turkish Cypriots have said that they have the same rights as the Greek Cypriots when it comes to the island’s offshore resources,” says Ayla Gurel, a leading independent political and energy analyst and researcher, based in northern Cyprus. “They say that while both sides are trying to reunify the island, such resources should be exploited jointly. If they aren’t, then they will conduct their own offshore oil and gas exploration, or act to stop exploration altogether.”
The ROC government rejects this approach and says instead that it will go ahead with developing the resources on its own, while depositing a share of the benefits for the Turkish Cypriots in an escrow account, while awaiting a successful reunification of the island.
The Turkish Cypriots say this is unacceptable, and with no reunification in sight, they have granted their own offshore exploration licenses to Turkish oil and gas firm TPAO – including rights to Block 3. So, the arrival of the Saipem 12000 to explore in this area was a red line for Turkish Cypriot and Turkish leaders.
In early February, Turkish warships intercepted the vessel and prevented it from accessing the block. This prompted an angry reaction from EU-member Cyprus, while also prompting EU President Donald Tusk to threaten to call off a planned Turkey-EU summit on March 26, if Turkey did not change its behavior. So, the dispute has harmed already fraught Turkish-EU relations.
This is not the first time that oil and gas exploration off Cyprus has sparked a confrontation. Greek Cypriot leader Nicos Anastasiades walked out of UN-sponsored reunification talks in 2014 when a Turkish exploration vessel, the Barbaros, similarly headed into these waters.
This time, though, “Turkey decided to play hardball,” says Associate Professor Dimitrios Triantaphyllou, director of the Centre for International and European Studies at Kadir Has University in Istanbul. “This is in part because recent finds indicate there may be much more gas out there. This raises the stakes considerably.”
More gas makes the development of the fields more economic. And the possibility of Cyprus acting with Israel and Egypt to create a viable gas supply hub for Europe may be seen as threatening by Ankara.
“Turkey sees itself as a major transit corridor to Europe for oil and gas,” Triantaphyllou continues. “Already, energy from Azerbaijan, Iraq and elsewhere goes through the country. Recently, Israel, Egypt, Cyprus and Greece have been meeting to discuss exploiting offshore reserves, and this has worried Turkey.”
Israel moved forward recently on a deal to sell its gas to Egypt, while Cyprus also says it is close to a similar arrangement. Last December, Cyprus, Greece, Italy and Israel also signed a Memorandum of Understanding on an ambitious 2,000km East Med pipeline to deliver the basin’s gas to Europe, bypassing Turkey.
Yet Israel also has a dispute over maritime frontiers with neighboring Lebanon, while several years after the Leviathan and Aphrodite finds, there is still no agreement between Israel and Cyprus on unitisation – a key deal that would pool the two gas fields’ resources. This is likely because Israel does not wish to unnecessarily aggravate Turkey – a more crucial regional power than Cyprus.
East Med would also be highly costly and pose great engineering challenges, given the sea depths and floor characteristics of the Eastern Mediterranean.
At the same time, Syria also has claims over the region’s waters, which have largely been on ice for the past seven years during the country’s civil war. Yet, Damascus may be set to return to the table in the months to come.
All these factors add to tension in the Eastern Mediterranean and make oil and gas exploration a high-risk undertaking. Yet despite all this unresolved conflict, more exploration is on the way.
The ROC has agreements not only with ENI and Total, but with US giant ExxonMobil to do more drilling. The US major is due to start this in the second half of the year.
“The entry of a major trans-Atlantic energy company into what has been a regional energy play does raise the stakes,” says Lesser. “They bring with them a lot of resources and geopolitical links.”
UN talks to resume?
Some argue that this potential confrontation could spur a resumption of the Cyprus talks, as a solution to the island’s division would also resolve many of the disputes over maritime boundaries and hydrocarbon resources.
“Everything points back to finding a solution to the Cyprus problem,” says Gurel. Yet, while both sides may be willing to return to the table, “we can’t just start again where we left off, plodding on with talks while the drilling goes ahead.”
Indeed, some 43 years have passed since the first UN reunification talks began, and new drillships are due to arrive relatively soon. That means the clear blue waters off Cyprus could be about to get a lot murkier.